Harley treading carefully in India, where it costs twice as much to buy a Hog

In its push into India, second only to China as the world’s largest motorcycle market, Harley-Davidson Inc. faces some daunting challenges.

It’s a market dominated by several well-entrenched Japanese and Indian manufacturers, including Hero Honda, a joint-venture between Japan’s Honda Motor Co. and India’s Hero Group.

It’s also a market where the price of a new Harley is double what it costs here because of an import tariff and other taxes.

Still, India’s growing economy, rising middle class and expanded highway system has created a demand for touring motorcycles.

“We held some product clinics in India and had incredible response. We know that’s going to translate very well for us as we enter the market,” said Matthew Levatich, Harley-Davidson Motor Company president and chief operating officer.

The company said it has begun identifying initial dealers in Mumbai, Delhi, Bangalore, Hyderabad and Punjab State.

Harley’s entry in India marks a major win for the motorcycle maker, which has been vying for a foothold in that market for years. The country of more than 1 billion people has experienced roaring growth in recent years, though its economy has cooled in the downturn. Growth for the fiscal year ended March slowed to 6.7% from 9% the previous year.

The company first launched plans to enter the Indian market in 2007, but the venture was delayed by the tariffs and emissions standards.

The tariffs remain in place, but the company views demand as strong enough to overcome them. Also, India has now adopted international engine emissions standards, removing that obstacle.

“We are very optimistic, even though we understand that the Indian market is nascent and will grow at a modest pace,” Levatich said.

Will Harley ever manufacture motorcycles in India?

It’s possible but very premature to answer that question, according to Levatich.
“The focus now is on getting the foundation established, and the numbers will follow,” he said. “We are going to play it smart, careful and adjust and adapt as we go.”

The Associated Press contributed to this report.

About Rick Barrett

Rick Barrett covers manufacturing, telecom and agriculture. He has received Best in Business awards from the Society of American Business Editors and Writers and was co-recipient of a Barlett & Steele award for investigative business journalism.